Newsletter 9 Investing in Real Estate in Portugal, Good idea or not?

Investing in real Estate in Portugal Good idea or not ? Lisbon, 27th November 2018 European Trends According

Investing in real Estate in Portugal Good idea or not ?


Lisbon, 27th November 2018

European Trends

According to, Emerging Trends in Real Estate Europe 2019, Lisbon’s real estate market has taken the lead, moving up from 10th place to 1st. European cities were ranked according to their overall investment and development prospects. The annual report published jointly by PwC and the Urban Land Institute (ULI) is based on the opinions of over 800 real estate professionals in Europe, including investors, developers, lenders and advisors.  
 
Interviewees emphasized Lisbon’s “quality of life” and “positive” leadership as its main attractions. Lisbon has been grouped with other smaller European cities into the new category called the “risking stars”. The top ten European cities, expected to do well in 2019 are a mix of smaller new cities like Lisbon and larger more established markets such as Berlin, placed in 2nd, followed by Frankfurt, Hamburg and Munich ranked five, seven and ten respectively. Madrid, Amsterdam, Vienna and Dublin are all amongst the top 10 and are expected to fare well in rental growth.
 
The traditionally stronger European markets, seen as peak markets, are less popular as they are seen as entering an end-cylce. The focus of investment is now moving towards smaller more dynamic cities. Portugal’s economy is growing at a healthy rate and Lisbon has become an international destination for companies, investors and tourists. Its high quality of life, its potential for attracting innovation and talent are also strong factors contributing to its positive evaluation.
 
Despite continued investment and demand for its commercial real estate remaining strong, London’s market is overshadowed by Brexit affecting its short-term prospects, with 70% of Europe’s senior professionals believing that the UK’s capacity to attract international talent will fall after the March 2019 deadline.
 
One of the main barriers to investment continues to be the availability of suitable assets as capital continues to flow into Europe, especially driven by Asia which has shown great interest in European cities. This is putting pressure on the core end of the market with 70% of survey respondents agreeing that prime assets are over-priced. Meanwhile, 28% of respondents believe that the amount of available equity for new investment will continue to grow from last year’s, despite particularly high confidence in the 2018 market.
 
The growing influence of social value alongside the financial returns means that the industry is moving towards using a wider range of non-financial measures to assess the value of real estate businesses. Non-financial metrics are thus increasingly important in measuring the financial returns and satisfaction levels for an investor.

The question on everyone’s minds is: Is Lisbon’s real estate market in a bubble?

Despite the indisputable prestige of PwC, looking through the 92 pages of this report will not give you an answer to this question. Let’s not forget that the 800 professionals interviewed for this survey work in real estate, and real estate companies don’t usually talk about bubbles in the market, especially when they are talking about products they themselves are selling. 

The reality is that the price per square foot has increased substantially in the last years, but Lisbon’s market is not really comparable with the other 9 cities in the top ten.
And let us not forget that Lisbon is a small city, central Lisbon is even smaller, so with less on offer prices will tend to go up and not down…something we have known since the 19th Century, thanks to David Ricardo’s Law of Rent.

The question shouldn’t be viewed from the price per square foot, but more from the value of the investment as a whole. A property selling for a higher cost per sq foot, can be seen as an excellent financial investment (location, quality construction, liquidity etc), and the exact opposite can be true too.

At the end of the day, the key, as in other markets, is being able to distinguish between opportunity and opportunists. How do you do that? It is always wise to get some impartial advice from local specialists, who above all look out for the client’s interests. They are impartial because they do not work for a real estate agency and their top priority is to leave their clients feeling that their advice was worth it.

And this is exactly what  GETiN Relocation Services has on offer for you: Professional Advice. We can help you with the important stuff like explaining to you all the different areas of the city, we can provide you with an impartial study on a property search, we can work with the best legal partners to ensure you get your Visa and Immigration papers in order, we can offer practical financial advice and finally, we can help you settle into your new home.
 
With a large network of experienced consultants in the Portuguese market, analysts and project managers, GETiN can help business and private clients with their long-term and short-term relocation projects.
 
We pride ourselves in offering our clients a personalized service, with total integrity and transparency, to achieve reliable solutions.

 If you wish for more information, please contact us.

Duarte Jardine

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Contacts :
GETiN- Relocation Services, Av. Sidónio Pais, 26-R/C Esq. 1050-215 Lisboa Portugal

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